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Union Budget 2023: What’s in Store for AI?

The government is expected to set aside an R&D budget for tech startups and corporate research wings to develop scalable AI tools
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Finance Minister Nirmala Sitharaman is all set to present the Union Budget for 2023 on February 1 in the Parliament. As Budget expectations for various sectors continue to roll in, we decided to take a look at the expectations for AI in the upcoming Budget.

With India taking over the chair for Global Partnership on Artificial Intelligence (GPAI) to support responsible and human-centric development and use of AI, there is a growing need for the government to focus on the use of this technology. The AI sector has pinned a lot of hope on the Union Budget 2023 and is expecting a budget allocation in the form of incentives, tax benefits, and funding for research and development to promote the growth in the industry.

Subsidising AI adoption

In 2020, Prime Minister Narendra Modi said that India should become a global hub for AI in the coming years. Over the years, the Modi-led administrations have stressed heavily on the importance of technologies such as AI. 

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A report published by the National Association of Software and Service Companies (NASSCOM) titled ‘AI Adoption Index’ said that the adoption of AI and data utilisation strategies could boost India’s GDP by USD 500 billion by 2025.

Speaking in this regard, Dr Mukesh Gandhi, founder and CEO, Creative Synergies Group told AIM that since this GPAI alliance is targeted towards supporting advanced AI research, we can expect a sizable commitment in the 2023 Budget towards subsidising AI adoption across industries–especially keeping the economic forecast in mind.


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“AI, after all, can offer a lot to businesses, right from grassroots to advanced levels. For instance, AI can support original equipment manufacturers to automate tasks, help them draw actionable insights and direct employees towards skill-based tasks. It can also play a key role in businesses retaining and attracting more business,” Gandhi said.

Shefali Pahwa, founder of BlockLegal, echoes similar sentiments. “If there is one technology area that India must absolutely prioritise to ensure its long-term progress and security, it is AI,” she said. “To guide this endeavour and spur the necessary momentum, a comprehensive policy framework paired with industry incentives is essential.”

“We expect the government to come up with a policy framework and encourage the applications of AI in the form of giving grants or tax benefits,” Mr. Sangeet Kumar, Co-founder and CEO, Addverb Technologies said.

R&D budget

Organisations today are moving away from traditional IT models to AI-powered interconnected systems. However, achieving this at scale requires much higher supercomputing capacity and talent access than currently exists.

Mahesh Kulkarni, co-founder and MD, AFour Technologies, expects the government to set aside an R&D budget for tech startups and corporate research wings to develop scalable AI tools. “Incubation centres will be invaluable for testing ideas from around the country and deploying the ones that click. Building core computing power is vital so that even smaller companies can benefit from technologies like blockchain, AI/ML, and cloud computing,” Kulkarni said.

Many industry experts also expect the finance minister to roll out new schemes that encourage industries to invest in core R&D on AI and Robotics to accelerate India’s goal of becoming a USD 5 trillion economy by FY2025.

Speaking about the same, Jagdish Mitra, chief strategy officer & head of growth, Tech Mahindra, hopes that the upcoming Union Budget 2023 will be a beacon of hope for creating national R&D ideas incubators, which will nurture critical cross-disciplinary research, new ideas, and technologies through the early phase.

Facilitating AI research and investment 

According to the NASSCOM report, India’s investments in AI technologies were expected to cross USD 880 million by 2023. While this is no doubt a significant number, India’s share in global AI investment would still be only around 2.5%, as per this report. “With the rise of new-age technologies such as AI and the proliferation of internet access as well as 5G services all across India, it is an opportune time for India to invest in AI. To facilitate the growth of AI, India still needs to improve in terms of high-quality research,” Mohammed Roshan, co-founder and CEO at GoSats, said.

Further, Roshan is of the opinion that the government needs to look into investments to facilitate this and make it seamless for organisations to move from data and technology silos to building specialised AI capabilities at scale across sectors.

Bridging AI talent gap

The AI sector has massive requirements for skilled professionals. However, there is also a wide talent gap prevailing in the industry. According to a Deloitte survey, nearly 13% of the respondents cited a lack of skilled AI talent as their top challenge. The industry is expecting the government to allocate a portion of the Budget to bridging the AI talent gap as well as upskilling and reskilling the Indian workforce. 

Kulkarni expects investments in training resources for IT professionals to bridge the AI skill gap. “This year will witness the proliferation of deep tech trends, and powering up IT and human assets to stay in line with those trends is critical,” he said.

Gandhi also believes the government should look into supporting stakeholders who aim to open more training institutes. “These modules should equip the upcoming and existing workforce with advanced knowledge in AI/ML, IoT, data analytics and more. In time, this could help address the 5 lakh talent gap in the IT industry,” he said.

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Pritam Bordoloi
I have a keen interest in creative writing and artificial intelligence. As a journalist, I deep dive into the world of technology and analyse how it’s restructuring business models and reshaping society.

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